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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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I red my mother as a live in nanny. We pay her about 8-9 K a

Customer Question

I hired my mother as a live in nanny. We pay her about 8-9 K a year and we are not deducting any federal or state taxes. I called the IRS and asked if we would be required to deduct anything and we were told no because somewhere in Pub 926 it states that it was not necessary for the small amount she is making. Are we able to claim a child tax credit for what we pay out at the end of the year? Also, would my mother have any repercussions for not filing? Thanks.
Submitted: 8 months ago.
Category: Tax
Expert:  Lev replied 8 months ago.

Based on your information - your mother is your household employee.
Please be aware that wages paid to your parent are NOT subject to social security and Medicare taxes

Expert:  Lev replied 8 months ago.

See IRS publication 926 page 5
https://www.irs.gov/pub/irs-pdf/p926.pdf

Wages not counted. Don't count wages you pay to any of the following individuals as social security or Medicare wages, even if these wages are $2,000 or more during the year.
3. Your parent. Exception: Count these wages if both the following conditions apply.
a. Your parent cares for your child who is either of the following.
i. Under the age of 18, or
ii. Has a physical or mental condition that requires the personal care of an adult for at least 4 continuous weeks in the calendar quarter services were performed.
b. Your marital status is one of the following.
i. You are divorced and haven't remarried,
ii. You are a widow or widower, or
iii. You are living with a spouse whose physical or mental condition prevents him or her from caring for your child for at least 4 continuous weeks in the calendar quarter services were performed.

.

You are asking about child tax credit - but most likely - you meant - a credit for the child care expenses - that is a different credit.
Here is a publication related to that credit

https://www.irs.gov/pub/irs-pdf/p503.pdf

and yes - you are eligible to use the expenses paid to your mother if your mother is not your dependent.

On the other hand - payments you made to your mother is her taxable income - and while these payments are not subject to social security and Medicare taxes - these are still subject to income tax - and if you mother has other income - she might be required to file the tax return.